London goes for the gold in luring more business

Olympics may have helped move country in right direction

October 21, 2012|Phil Rosenthal

Tourists and Londoners alike flocked to the Tower Bridge in London, England, to take pictures of the iconic structure with the Olympic rings hanging from the center on Wednesday, July 25, 2012, two days prior to the opening ceremony of the 2012 Summer Games. (Brian Peterson)

LONDON — — As long as I was going to be here for a few days, I thought I would call ahead to see if I could visit Gregory Case, president and chief executive officer of Aon PLC, the insurance giant born and based in Chicago until Case moved its global headquarters abroad to London this year.

It turns out Case was to be in Asia when I was in his new hometown.

And the handful of other top Aon executives who also made the move from Chicago to London? Also in Asia, I was told. I didn't take it personally.

Fortunately, Big Ben, the Tower of London, the British Museum and Buckingham Palace (where the guard detail would impress even security-minded Ald. Ed Burke) stayed behind — as did a sizable chunk of my money.

Nothing like a vacation to open one's wallet and eyes to the wisdom of Chicagoans, like private equity veteran and Choose Chicago Chairman Bruce Rauner, who preach tourism as a way to boost the local economy. Of all the Starbucks and McDonald's in all the world, why shouldn't they walk into ours?

London is basking in its post-Olympics/Paralympics glow, as much as the English bask in anything.

As was touted in Chicago's failed 2016 bid, it is hoped the Games will serve as a worldwide ad promoting the United Kingdom, making it more attractive to companies like Aon and to vacationers like me. In the short term, however, the Olympics seemed to scare away normal tourism business.

The Office for National Statistics this month said the number of overseas visitors to the U.K. in July and August was down 7 percent from the same period a year ago, but tourist spending was flat year to year. Another report found the number of visitors to top London attractions between May and August was down 15 percent from 2011.

On the plus side, the Olympics provided impetus to beef up infrastructure, which, while inconvenient, has the potential for long-term dividends.

Brits like to complain about public transportation every bit as much as we do. But my wife, whose early morning commute gives her an intimate relationship with the CTA's subway system, noted the relative cleanliness of the London Underground. I noted the average fare for a one-way ticket runs about $4.30. That's an 8 percent increase over a year earlier. Yet the Tube, with more than 3 million riders a day, still requires subsidies.

A page from London's playbook worth studying, however, is a move in recent years to use classical music in Tube stations to successfully discourage young reprobates from loitering, harassing staff and committing other offenses.

If we're up for importing another idea, every one of our London restaurant meals ended with payments made tableside by swiping our credit card with a hand-held device. Though this was jarring at first, particularly in Michelin-decorated gourmet establishments, the benefits soon became apparent: Our card never was out of sight, and the process was sped up considerably.

It's safe to say Aon didn't come to London for the credit card swiper while relegating Chicago to its hub for the Americas, a region that accounts for almost half the company's business. Government efforts here to be friendlier to business, including a cut in corporate tax rates, evidently are paying off.

"We want to establish the most competitive tax system in the G-20 to support enterprise and attract new business," David Gauke, a treasury minister, said last month in Washington at an American Enterprise Institute seminar on whether U.K. reforms are a road map for the United States.

"We have already cut (corporation taxes) from 28 percent to 24 percent ... and in two years' time it will be 22 percent, within sight of 20 percent," Gauke said. "By 2014, the U.K. will have the lowest corporation tax rate in the G-7 and fourth-lowest in the G-20. But a strong and competitive tax system is not just about cutting rates. … It means offering businesses the stability and certainty they need to make long-term investment decisions and feel safe and certain doing business in our country."

The Financial Times has reported that Ernst & Young sees at least 20 multinational corporations working on plans to relocate global or regional headquarters to Britain in the next year, the result of an attempt to put it on par with historically low-tax countries like Singapore and Switzerland.

There are some snags. The tiny amounts companies like Facebook and Starbucks have kicked into the U.K. government coffers on the revenue they take in there, for example, have generated some outcry in recent days.

But the expectation is this overhaul will mean adding a few thousand high-paying jobs to the area — and the windfall of extra consumption and employment taxes that come with them. But that's not the only benefit the nation anticipates, sounding very much like Illinois politicians cutting breaks to discourage companies from bailing for Indiana.

"Having those decision-makers in the U.K. … sends a clear signal that the U.K. is open to business," Gauke said. "The fact that they're in there, in the U.K., is creating a more favorable (business) climate and creating perhaps more opportunities for British people. … We want to pull every lever that we can to demonstrate that the U.K. is a really good place to do business for those companies that can choose where they can go."

Plus, if you and your executive team have to get away to Asia for a week, the flight to Tokyo from London is about 300 air miles closer than the flight from Chicago.